Harmonized sales tax will raise prices, home builders say

HST Ccould be a hurdle for buyers in a recovering market, they predict

July 28, 2009 Brian Morton Vancouver Sun

Homebuilders areworriedthat B.C.'s proposed harmonized sales tax will add significantlyto the price of a new home, and perhaps slow down the real estate market's signs of recovery.

Rob Grimm, co-owner of Richmond-based Portrait Homes, said in an interview that recent sales have picked up as buyers take advantage of lower real estate prices, but that thenew tax -- which will add a provincial sales tax to the federal goods and services tax on new homes, effective July 1, 2010 -- might change that trend.

Like others in the homebuilding industry, he's concerned the new tax will turn off buyers. (read more)

Recreational real estate will come back strong

Some developers kept on building through the recession, so when demand begins to surge, they will have the supply

By Steve MacNaull, The Daily Courier, October 14, 2009

Almost nobody isbuying recreational real estateright now, but the market will bust open once again. The future is bright, according to Jon Swickel, executive vice-president of Calgary-based Bellstar Hotels and Resorts, which has put Okanagan properties such as Copper Sky and Orchard Beach in West Kelownañ Bella Serra at the Quail Golf Course in Kelownañ Spirit Ridge in Osoyoos, Canyon Desert in Oliver and The Strand in Vernon.

"If no one is buying right now, it means demand isbeing pent up. When people decide to startbuying recreational homes again, we'll be ready because we've continued to plan and build new properties during the recession. [...]

From 2004-08, the recreational real estatemarket boomed along with the economy, and those with money sought out second homes in desirable areas to use for holidays, retirement homes or investments. The Okanagan, with its great weather, scenery, lakes, golf and wineries, benefited exponentially as the wealthy flocked here to buy second homes in hotels, highrises, on the waterfront, around the gold courses and near the vineyward.

Sales skyrocketed to record levels, and prices were pushed into the stratosphere. However, when the economy started to tank in the fall of2008, recreational real estate sales were one of the first things to dry up. As a result, developers were left with inventory they couldn't sell and projects were put on hold.

[...] "Developersshould use this time tobe more realistic andwork with communities where they would like to build in the future," [says Brian Wills of Vernon-based Lynnspeak Consulting] Even in tough times, Wills says, there's a big disconnect between developers and communities. Developers feel communities put up nothing but roadblocks and communities feel resorts only increase traffic and gobble up land. "The fact is, reacreational real estate is mutually beneficial to developer and community," he said.

"Resorts are net economic generators by infusing money into a community for construction, employment and attracting people who will spend their money inthewider community. Developers and communities have to work together on what is mutually beneficial." [...]

Okanagan Market Rebounding in Slo-Mo
Saturday, September 26, 2009
By Kathy Michaels

The real estate market is gaining steam once again— just not in the Okanagan.

RE/MAX released its Bricks and Mortar Report yesterday, claiming that the bounce back which began in early spring made this recession one of the shortest on record for real estate. Low interest rates, pent-up demand, and improved affordability all helped bring on the recovery. Sales figures from January to August 2009 showed the biggest increases to be in  Vancouver, which was up a 14 per cent to 23,158 and in Victoria which was also up 7.4 per cent to 5,266.

Missing from the roster of cities that are once again heading into a boom phase was Kelowna, which according to figures from the BC Real Estate Board was actually down 16 per cent during that period.

Cameron Muir, chief economist for the BC Real Estate Board, explained that the valley faces some unique conditions that are slowing down its recovery.

“Certainly we see the market conditions in Kelowna are improving but not at the rate we’ve seen in Vancouver and Victoria,” he said.

“It’s still a buyers’ market in the Okanagan, where Vancouver and Victoria are sellers markets.”

The reason why the Okanagan is lagging behind the Lower Mainland and Island markets is because of the type of buyer that the Valley attracts.

It’s been long documented that this valley’s big spenders have largely been retirees, recreation property buyers and investors. For the time being, they are still feeling a bit “skittish.”

“The resurgence of demand, is growing much more slowly there than it is in the end user and first time buyer market,” Muir said. “The Alberta economy and its relative health is also important to that market.”

That said, there are signs of improvement in the long term.

“On the new home side, there has been a glut of inventory on the condo side, that’s starting to work itself out and when we look to the next 12 or 18 months, we expect a continual gradual increase in sales,” he said, that will help prices stabilize.

“Strong markets in Vancouver and Victoria mean that the consumer demand is going to filter out to the Interior in the coming months and that bodes well for Kelowna.”

Muir also pointed out that even though it’s the retirees that are being slow to perk the market back up, they’re also the saving grace of the local economy.

“Many  retirees move from other areas or other provinces and they bring a significant amount of net worth from somewhere else, and they invest that in their homes, they pay taxes and they support high wage service industries like medical, dental and home construction,” he said.

“All those things are positives, as well as the fact that retirees who come with pensions don’t have their incomes change as a result of swings in the business community.”